One of the bigger pieces of business news this week is that Starbucks, which has struggled mightily over the past year as the collapsing economy had made people slightly less ready to buy $5 lattes every day, has thrown what the company's own CEO has acknowledged is an "off-brand" "Hail Mary pass": they are about to release Via Ready Brew--otherwise known as Starbucks instant coffee. The move is an object lesson for all businesses looking to adjust to the current consumer spending climate.
If you listen to Howard Schultz, the company's CEO, you'll find an acknowledgement of the rebranding, but not of the rebranding's being a response to the economy: “It just happens to fortuitously coincide with the downturn in the economy,” he told the Times. “It wasn’t planned that way.” We're going to go ahead and not really believe him. The decision seems too canny, and too tailored to Starbucks's current problems, for it to be unrelated.
Times business columnnist Joe Nocera went to the product introduction in New York and, on his blog, has a characteristically witty and must-read take. For one thing, and though marketing die-hards may consider this hardly important, Nocera reports that the coffee tastes good--which is to say, it does not taste like it's instant. And Nocera lauds Starbucks for taking a risk. But he is unsure that it will ultimately be a successful gambit: "The question, of course, is whether Starbucks customers, who all now have espresso machines in their kitchens, are going to warm to the idea of instant Starbucks."
If anything, we admire this move--less in concept than in specific execution--more than Nocera does. We're not even sure it's "off-brand," as Schultz put it (he was likely being strategically disingenuous in saying the move was not a response to the economy, so why can't he have been strategically disingenuous here, too?). This is instant coffee, but it's instant coffee done...by Starbucks. Look at that slick packaging (image courtesy the Times). Note how your options are "Colombia" or "Italian Roast"--normally, instant coffee options range only from "regular" to "decaf". Check out the product's website. "This is not instant coffee as you know it. This is rich, flavorful Starbucks® coffee in an instant." The fact that the coffee apparently does taste that way certainly won't hurt. But what will really get that message across is Starbucks's indelible brand.
We're ready to see this new product succeed. And if it does, it will become the model for how a business, large or small, whose brand is known for being "luxury" or "gourmet" can offer an ostentatiously inexpensive product while retaining its brand's appeal.
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June 10, 2009